Definition of poverty! Limitations of defining poverty based on income!

 Poverty is defined as a social condition in which the person or family is unable to procure resources necessary for basic survival. They are unable to meet a certain minimum of living standards that are expected for the place that one lives. Every country and region has a certain minimum income level set below which the person is said to be poor. The basic needs are food, clothing, and shelter.

Types of poverty

1.     Absolute poverty: This is a total lack of resources and means to meet the most basic standards of living.

2.     Relative poverty: This is when there is a lack of resources to meet the minimum standard of living that is considered normal for a society in which the person lives. For instance, indoor plumbing is normal in the industrialized nations and its absence could be considered a sign of poverty.

Poverty types [Source: Anti-corruption Nepal]

3.     Income poverty: This is set by the government of the country and poverty is said to exist if the household does not possess the minimum level of income that can buy them the resources to meet the basic standard of living. Globally, this is taken as $2 per day. But this depends on the size of the household and the number of children in the family. In the USA, for a single person, this is $ 12331 per year, for two it is $ 15871, and for two with a child, it is $ 16337 per year.

4.     Cyclical poverty: This is limited in duration and linked to specific events such as war, natural disasters, or recession.

5.     Collective poverty: is when an entire section of society is affected by poverty.

6.     Concentrated collective poverty: In this, a section or subgroup of society is poor.

7.     Case poverty: This occurs when despite the availability of resources a particular family cannot utilize it to improve their living condition.

8.     Asset poverty: This is present when a family does not have enough assets that can be used when there is no income for three months. They are not poor if they continue to have a job but are unable to deal with life when the income source is suddenly shut off.

Poverty and income-limitations

Most of the countries of the world use income to define poverty. By various measures of the government, these rates are coming down. But poverty defined by means of income may have its own limitations. By defining poverty in terms of income, it does not consider the savings, debt or access to a credit facility of the household.  Besides, this does not take into account the money equivalent that the household gets in terms of free gifts, services, exchange in form of barter system etc. Also, many households in countries such as India have a rural property that they have rented or from which they are getting an income. But this is not taken into consideration. Thus these families are able to meet their requirements well through this accumulated wealth but are put down as poor even though they are not.

Poverty and income [Source: Slideplayer]

There are also, many households that may be considered poor or maybe above the poverty line and yet they may be not able to meet their basic requirements since they are spending money at places such as cosmetics, scents, entertainment, or in other lavish ways for status or otherwise. These are falsely poor and one cannot be certain in which category to place them in.

Additionally, survey designs may be faulty and unable to pick up the right data. Some people may not report their income properly deliberately or ignorantly.

Poverty defined [Source: Pinterest]